Foreign investors jittery over bank CEOs’ sack

By Emeka MamahÂ & Babajide Komolafe
LAGOSâ€”The removal of managing directors/chief executive officers of five banks last friday by the Central Bank of Nigeria (CBN), has jolted the international investing community as they made frantic telephone calls to Nigeria, expressing shock and concern over the true health of Nigerian banks just as the apex bank has redeployed Resident Examiners on special examinationÂ in all the 24 banks.
An assistant general manager in the treasury department of one of the unaffected bigÂ banks told Vanguard, â€œWe have been receiving calls from international investors since Friday.

”They are worried by the sack of the banksâ€™ officials coming, especially at a time when they are beginning to regain confidence in the Nigerian banking industry by resuming extension of credit lines to some banks in the country.

”They are particularly worried that the investors might have grossly underestimated the severity of the liquidity crisis in the banks,â€ he added.

Also, a top official of an international investment company with strong presence in Nigeria told Vanguard that, â€œThe action ofÂ CBN is a positive one for the industry because it addresses one of the major concerns about the industry which is transparency, disclosure of bad loans. But we are surprised and worried by the speed of the action.

”Though we knew something like this would happen but we expected that they would conclude the audit of the 24 banks before taking such decisions.

”One major issue for international investors is whether the action extends to the whole board of the banks, and, if this means a withholding action on the banks.

”We are also concerned about the nature of the tier two capital being injected into the banks and we expect to hear what this means for the shareholders of the banks.

”We expect that the interest of shareholders would be protected. Some of the affected banks would experience pressures as depositors demand the funds, we are concerned how the CBN would handle such situation, because there are concerns that the manner in which the decisions were announced might impact the system severely if not well handled.â€

Meanwhile, Vanguard has reliably gathered that the apex bank in continuation of the on-going audit of the 24 banks, redeployed the resident examiners in different banks for special examination assignments, after which they would return to the banks where they reside.

A reliable industry source who confirmed this development said the examiners are combing every where and asking probing questions about specific transactions.

It would be recalled that CBN deployed resident examiners in banks in January.

These are CBN officials who are to work in the headquarters of the banks to monitor and scrutinise their transactions and accounts.

A banker told Vanguard that â€œthe countenance of the examiners are different from what we are used to. This time round they are very formal and unfriendly and the issue of offering refreshment like before is out of the question.

”Everybody is afraid to approach them for anything so that you are not suspected of trying to hide anything from them,â€ he said.

KADCIMA faults action

In a related development, the Kaduna Chamber of Commerce, Industry, Mines and Agriculture (KADCCIMA), has condemned the removal of five chief executive officers of commercial banks and their management teams by CBN.

KADCIMA said it was wrong for CBN to summarily punish the affected bank chief executives without giving them fair hearing, noting that the action will not encourage economic growth.

President of KADCCIMA, Hajia Saratu Aliyu, said this weekend shortly after declaring the Annual General Meeting (AGM) of the chamber open in Kaduna.

She added that foreigners do not invest in the country because of the prohibitive cost of doing business in Nigeria.
According to Hajia Aliyu, entrepreneurs in the country â€œcurrently generate over 70 per cent of their energy needs with dire consequences in terms of production cost and ultimately price competitiveness.â€